Newsom's 'Good Government' Also Good for Donors

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California Lt. Gov. Gavin Newsom is trying to redefine the role of his office in state politics. Good government initiatives are, however, seeming to coincide with large campaign donors, as well.

In seeking to sharpen the traditionally ambiguous role of state lieutenant governor, Gavin Newsom has posited himself as a Mr. Fixit for local good government measures under threat from out-of-towners.

But as Newsom has thrown his weight behind efforts to reclaim for pedestrians a plaza in San Diego and a plan to fight blight in San Bernardino County, he’s done double duty advancing the interests of major campaign donors.

Less than a month later, the project’s main backer, Qualcomm founder Irwin Jacobs, and his wife, Joan Klein Jacobs, put $12,000 in Newsom’s 2014 campaign fund, state records show. In 2009, Jacobs had given Newsom's failed campaign for governor $5,000, according to the records.

On July 27, Newsom issued a news release supporting a San Bernardino County plan to aid financially strapped homeowners by employing county powers of eminent domain. County officials are considering seizing underwater mortgages and reissuing more affordable loans to homeowners.

Real estate and banking groups have denounced the plan, saying it would scare away lenders and make it impossible for San Bernardino County residents to obtain new home loans.

In the news release, and in media interviews, Newsom labeled the complaints Wall Street bullying.

“We cannot let another day go by while families are forced from their homes,” Newsom said in the release. “We must think big and help our local governments develop solutions.”

Newsom got his start in city politics in 1996, when Brown, then the mayor, appointed him to the city’s Parking and Traffic Commission. The following year, Brown appointed Newsom to the Board of Supervisors. In 2000, Brown threw his weight behind Newsom’s campaign for San Francisco mayor.

In a presentation to investors reported in The Wall Street Journal, Mortgage Resolution Partners said it would begin with a $5 billion program in California that could grow to $500 billion nationwide. The company also told investors the company could earn a rate of return of 20 percent, according to Reuters.

Mortgage Resolution Partners’ spokesman is former Newsom communications director Peter Ragone, who donated more than $25,000 to Newsom’s campaigns for governor in 2010 and lieutenant governor in 2010 and 2014, records show. One donation, of $4,950, came from Ragone's public relations firm, PWR LLC.

In response to an inquiry, Ragone sent The Bay Citizen a statement from major Democratic Party fundraiser Steven Gluckstern, who is Mortgage Resolution Partners’ president.

“About a year ago I began having discussions with Gavin Newsom about devising solutions to the crisis of underwater mortgages, a problem crushing so many families in California,” Gluckstern said in his statement. “His admirable decision to speak out against the Wall Street lobbyists attacking public officials has to do with nothing more than his concern for the hundreds of thousands of Californians suffering under the weight of underwater loans.”

Newsom’s current spokeswoman added that Newsom’s support had nothing to do with campaign donations.

“Newsom has worked for more than a year with different groups within housing and municipal circles to identify creative and out-of-the-box solutions to keep families in their homes,” according to Newsom spokeswoman Deirdre Hussey.

Bob Stern, former president of the Center for Governmental Studies, a Los Angeles think tank that focused on campaign finance, said it’s possible that the donations, and Newsom’s advocacy, were unrelated.

“But 90 percent of the time, when we look at the money, it’s because it’s something donors want from officials,” Stern said.